Weichert Views Federal Action to Bolster Home Sales as Key to Economic Recovery
Leading real estate and financial services company cites ripple effect of each home sale
February 29, 2008 // Franchising.com // MORRIS PLAINS, N.J. – With Congress close to enacting a stimulus package to spur the economy, James M. Weichert, president and founder of Weichert, Realtors®, one of the nation's largest privately held real estate companies, reiterated his recent call for a federal tax credit or other incentive for home buyers. Such action, he said, would speed economic recovery and help avert a recession.
"Every home sale triggers a demand for goods and services that ripples through virtually every segment of the economy," Weichert said. "It is my fervent hope that as our lawmakers in Washington focus on economic issues, they will act to directly encourage home buying through a tax incentive. As the single largest segment of the U.S. gross domestic product – accounting for 33 percent of all U.S. economic growth in the past several years – housing historically has been the powerful engine that drives economic prosperity. Given swift and appropriate legislative action, the housing industry can lead the way to both short- and long-term recovery."
The economic repercussions of a home sale begin almost immediately, Weichert said. In the interval from contract signing to closing, home buyers call upon a wide range of service suppliers that typically include home inspectors, termite/pest inspectors, mortgage lenders, appraisers, title companies, insurance companies, and lawyers. When home inspections turn up problems, a handyman is employed to do fix-ups. On moving day, both parties in the transaction will need truck rentals or moving services. Even the state in which the home sale takes place benefits, as the state government receives income from the real estate transfer tax.
Citing National Association of Realtors® (NAR) chief economist Lawrence Yun, Weichert said, "Based on the income of service providers alone, the sale of a $417,000 home generates $37,500 in direct economic activity, or approximately nine-percent of the sale price.
The nation's economy continues to benefit after the new homeowner moves in. First-time buyers may go to a giant home center or local hardware store for new door locks, paint supplies, and maybe a power lawn mover. They may have carpets cleaned or replaced, and hardwood floors refinished. They'll need blinds and window treatments and may splurge on new appliances, kitchen countertops, furniture pieces, and any number of other items.
Not surprisingly, trade-up buyers spend even more. Weichert said that it's not uncommon for trade-up buyers to do high-end kitchen and master bath renovations and spend thousands of dollars on adding a deck or upgrading landscaping. Moving into a larger home also requires more furniture and accessories.
A report published in 2005 by the National Association of Home Builders (NAHB) found that in the first 12 months of ownership the typical buyer of an existing home spends $6,540 on home-related items, while new-home buyers average $8,642 – figures that would run higher today.
Housing's economic impact is even more apparent when you look at the new-construction industry itself, which not only provides employment for the carpenter, plumbers, electricians, and others who work on the new home, but also promotes job growth in industries that produce and distribute building materials, heating equipment, and other home-related products. According to that same NAHB study, building an average single-family home generates 3.47 jobs and $82,269 in tax and other government revenue.
Weichert said, "While the President and Congress are to be applauded for raising the conforming mortgage loan limits in their stimulus package, a tax credit for home buyers would provide an added incentive for the consumer to act upon the many exceptional buying opportunities in today's market and, in so doing, invigorate the economy."
Weichert has nearly 18,000 sales associates in more than 500 company-owned and franchised sales offices in key markets throughout the U.S. A family of full-service real estate and financial services companies, Weichert helps customers buy and sell both residential and commercial real estate, and streamlines the delivery of mortgages and home and title insurance. For more information, Weichert's customer service center can be reached at 1-800-USA-SOLD or at Weichert's Web site, www.weichert.com. Each Weichert franchised office is independently owned and operated.